U.S. Secretary of Commerce Howard Lutnick advocates for a broad free-trade agreement with India to reduce tariffs comprehensively. Despite high agricultural tariffs in India, Lutnick suggests a strategic approach to negotiations. The impending reciprocal tariffs pose challenges, but personal ties between leaders may facilitate a favorable outcome. Notably, India’s tariff rates on U.S. exports significantly exceed those for Indian exports to the U.S.
United States Secretary of Commerce Howard Lutnick stated on Friday that the Trump administration seeks a comprehensive free-trade agreement (FTA) with India, aimed at reducing tariffs across the board rather than negotiating on a product-specific basis. Lutnick emphasized the need for a significant, overarching agreement to strengthen the connection between India and the U.S., advocating for a unilateral reduction in India’s tariff policies toward American products.
In light of upcoming reciprocal tariffs expected to begin on April 2, Lutnick’s remarks align with recent discussions between U.S. officials and India’s Commerce and Industry Minister Piyush Goyal, who visited Washington in early March. While both nations have agreed to pursue a bilateral trade agreement by the end of October, the prospects remain uncertain due to signals that concessions may not be granted to India.
Lutnick remarked on the necessity for India to reassess its high tariffs, which he categorized as among the highest globally, suggesting a reevaluation of the economic relationship between both nations would be beneficial. He highlighted the personal rapport between Prime Minister Narendra Modi and President Trump as a potential catalyst for finalizing a trade deal.
Amidst India’s reluctance to open its agriculture sector during negotiations, Lutnick expressed optimism that the market would gradually liberalize while advocating for a comprehensive approach to trade discussions. He suggested that conditions such as quotas or limits could be strategically employed in negotiations. Moreover, Lutnick refuted the argument that tariffs contribute to inflation, attributing it instead to economic deficits and monetary policies.
A Nomura report highlighted a stark contrast between tariff rates, noting that India’s weighted average effective tariff on U.S. exports stands at 9.5 percent, in contrast to the mere 3 percent rate applied to Indian exports entering the U.S.
In summary, Secretary Howard Lutnick’s call for a broad-based free-trade agreement underscores the importance of reducing tariffs and improving trade relations between India and the U.S. The upcoming reciprocal tariffs and the significant tariff disparities highlight the challenges both countries face. Nevertheless, strong leadership relationships and a willingness to negotiate holistically could pave the way for a more fruitful partnership.
Original Source: www.business-standard.com
